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Which of the Following Is False About Algorithmic Trading

Question 21

Multiple Choice

Which of the following is false about algorithmic trading?


A) Algorithmic trading is random trading to avoid investor biases.
B) Algorithmic trading on automated trading systems allows traders to set up specific rules for trades including simple rules or complex strategies that will be automatically executed by a computer.
C) Once rules are established, the computer monitors markets for buy or sell opportunities based on the specifications of the trading strategy, allowing for instantaneous order entry in fast moving markets.
D) Disadvantages include the potential for mechanical failures and over optimization with some trading systems doing fine on historical data but doing terribly in real markets.

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